KUALA LUMPUR: Malaysian timber industrialist Sir Yii Ann Hii was living his dream.
Everything was going as he had so carefully planned since age 21, while he was studying engineering at Australia’s Deakin University, Geelong, a port city in Victoria state.
He graduated in 1984 and joined the family timber business in Malaysia and Papua New Guinea. After four years, he struck out on his own.
In 1990, he applied for a business visa in Australia, which was quickly granted, as the Malaysian from Sibu in Sarawak was already well known in the timber industry.
But the 56-year-old is now in a quandary. He wants to return to Australia where his wife, Beh Soo Hian, whom he met as a student, and their six children are, but he knows he would likely face prosecution by the authorities there.
Australia has ordered him to pay about A$50 million (RM160 million) in taxes, failing which, he would be sent to jail.
He had asked for a guarantee from the Australian Taxation Office (ATO) that he would not be detained pending his appeal against the order, but the reply was, “Pay up or go to jail”.
Yii, who was knighted by Queen Elizabeth II in 2007, has business interests in Malaysia, Papua New Guinea, the Philippines, Hong Kong, Singapore and Australia.
He said he had never had problems or issues with his foreign tax returns until 2010, when he received a letter from the ATO which wanted to do a retrospective tax audit on him for the years ending 2001 until 2009.
Based on the audit, the ATO decided that Yii was a tax resident rather than a non-tax resident as he had been earlier classified.
According to Yii’s lawyer Alvin John, the chairman of Investwell Group of Companies filed his tax returns in Australia as a non-tax resident for the years ending 2001 until 2009.
“The ATO made its claim based on its decision that Yii is no longer a tax resident of Malaysia, he is no longer a domicile of Malaysia and he has now moved to the domicile of his choice in Australia.
“This means that under Australian law, they can levy world tax,” John said.
He added that his client had always stated and proven that he was not a tax resident of Australia, never intended to be a domicile of Australia, and never stayed there for more than half a year.
Australian law stipulates that a person needs to be in Australia for more than half a year or 183 days to be a tax resident, John said.
He cautioned that Malaysians or foreigners having families in Australia for education or other purposes might be deemed to be tax residents of Australia and “thereby their worldwide income is going to be affected as well”.
An Australian Tax Consultant said the common determination of whether or not a person is a tax resident or non-tax resident is the length of stay in Australia, “which is, more than 183 days”.
“However, there are other factors that may make a person to a tax resident, such as their behaviour and action.
“For example, if a person purchases a house for his immediate family (wife and children) to reside in Australia as permanent residents, it may be seen as an intention to reside in Australia,” said Sabrina Ong, who is a partner at Fortiz Accountants, based in Victoria.
Yii filed a case at the Kuala Lumpur High Court on July 22, 2016 against Australia’s Taxation Deputy Commissioner and Commissioner and the Australian government.
He is seeking a declaration that he is a tax resident of Malaysia, a domicile of Malaysia, and that the decision of the ATO that he had abandoned his domicile of Malaysia in favour of Australia is null and void.
The defendants are due to submit their affidavit on Nov 1.